Market Commentary - April 2025

Monthly Update

The S&P 500 fell in April for the 3rd straight month but ended much better than it started the month. After falling almost 6% in March and then declining further in the days after the April 2nd announcement by the President of a reciprocal tariff regime titled ‘Liberation Day,’ the April 9th pullback of them in a 90 day pause, except with China, drove a strong rebound. By early May, the S&P 500 had rallied 9 days in a row and closed above the April 2nd close right before we got the reciprocal tariff details.

The message here is that markets and the economy are being predominantly driven by policy and that also includes the influence of government spending cuts via the Department of Government Efficiency initiative. Whether we agree with what is being done or not, it doesn’t matter as the markets have spoken. They prefer less tariffs than more based on the ups and downs seen over the past few months that are being driven by what is announced by the White House.

There are also of course real-world business implications and the sooner we get clarity on what the tariff field will look like the better. Businesses, when given policy and regulatory visibility, can do their best to maneuver through but without it, economic activity slows, capital spending plans are put on hold and hiring intentions take a pause. We are hopeful that we’ll get much more clarity this month with trade deals announced but the real key deal remains with China as trade has essentially stopped between the two biggest economies. Instead of debating who needs who more in the trade relationship, I’ll just say here that we need each other badly.  

I don’t like using the word ‘uncertainty’ to describe what is going on as life inherently is uncertain but it for sure is rather heightened currently. The game of forecasting the future is always a crystal ball activity and even more so now it seems. The big ongoing debate is whether the tariff/trade war we are now experiencing is first going to last, and if not, as we all hope, what the crux of the trade deals will look like and lead to and whether the economy can work through without going into a recession.  

As stated in my monthly letters for the past year plus now is that the US economy is very mixed with pockets of strength and weakness. The three pillars of growth have been 1)strong upper income spending helped by the dramatic rise in asset prices over the past few years and less sensitivity to inflation, 2)robust fiscal government spending that has resulted in about a $2 Trillion budget deficit which is near 7% of nominal GDP and 3)the huge amount of capital spending on building out the large language models needed to power Generative AI.¹ 

These areas of economic strength have offset the weakness seen in lower to middle income spending, a more than two-year manufacturing recession, the slowest pace of existing home sales in 30 years, modest CapEx growth ex AI, little global trade growth and a slowing pace of hiring in the labor market, though the pace of firing’s remains muted.

Economic growth globally has been mixed too. Europe overall is seeing little growth but countries like Spain and Greece are way outperforming its bigger peers like Germany and France and helped by tourism. There is hope though seen this year that European leaders have gotten the message that they’ve strangled economic activity via too much regulation, red tape and bureaucracy and just maybe some economic liberation can take place. Also, the fiscal spending spigots are getting turned on, particularly with spending on defense as countries raise the defense capabilities via pressure from the Trump administration. Also, Germany is easing their spending fiscal rules that will allow them to spend more money on infrastructure.  

The Chinese economy is seeing only modest growth, notwithstanding their headline GDP figure, as they continue to work through its housing downturn, challenged manufacturing sector outside of their expertise in EV’s, batteries, robotics, and in other things and muted consumer spending. Japan’s economy is sensitive to global trade and higher inflation, but Southeast Asia is showing pockets of economic outperformance, particularly in Singapore and Vietnam.  

The earnings outlook is as unclear as the economic one with both intertwined of course. The Q1 earnings seen so far have been pretty good but many companies are talking about slower growth in March compared to January and February. And for those who gave color on April, that slowdown has continued from March. Many companies are also giving wide ranges of guidance which highlights the lack of clarity in their outlook.  

I do want to point out though that market and economic turbulence did not start with the tariff wars. At the end of January, the DeepSeek news from the Chinese company negatively altered the view of the AI tech trade and the spectacular pace of outperformance by the 7 largest stocks started to take a breather. A breather that I believe can last a while and where investors can find other things to buy, both on the value side and outside the US.  

Also, as mentioned, government spending has been a major fiscal boost to economic growth and the needed desire to slow the pace of spending levels, along with outright cuts, will lead to slower growth. The credibility of US government finances is at stake but there are no painless ways of going through the detox. On the fiscal side, we are all watching the negotiations going on in DC to extend the expiring Trump tax cuts and as you can assume, there is a lot of political jockeying going on. A large chunk of the extension will just be a continuation of current tax rates but hopefully we do get some incremental tax relief.  

The US Treasury market as a daily messaging machine continues to go back and forth on whether tariffs are just a one-time step up in price or something that can cause enough supply chain disruptions that higher prices could be a multi-year process. Also, the extent at which the US economy can handle the current challenges being thrown at it via high tariff rates. This all at the same time we must question what the continued appetite foreigners have for US assets. A very notable thing we’ve seen over the past few months has been a weaker US dollar at the same time US Treasury yields have gone up. That’s not a good combination as on some days it occurs too with weaker stocks. Foreigners over the past few years have piled into US assets, helped by our large trade deficit, and some of that money is going back home. Something very important to watch this year and we are.  

Conclusion

A confluence of things is taking place that has resulted in market dislocation and economic worries, and it is not just tariffs. This is not the first time however, and whatever the causes, whatever the reactions, we’ve been through challenging times before and markets don’t go up in a straight line. History is replete with storms, but we’ve seen them before and do our best to power through.

We are possibly amid some major changes, both in the global economy and markets and the investing playbook that worked so well over the past few years might be transitioning from just owning the Mag 7 for example and into owning other things. And this is not only about tariffs. We are thinking everyday of what this possible new economic and investing landscape will look like and how best to position for it.

Whatever comes our way though, it remains vital that investors have adequate short-term liquidity over the next 2-3 years. Knowing that period is covered can help separate the balance of one’s portfolio from the ups and downs of the market. Time horizon is always crucial and is always the best friend of any investor.

Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

Investment advisory and financial planning services offered through Bleakley Financial Group LLC, an SEC registered investment adviser. Peter Boockvar is solely an investment advisor representative and Chief Investment Officer of Bleakley Financial Group.

 Approval# BFG 25-1008

¹ Bloomberg

Disclaimer

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

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Nothing in this material should be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market update is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction or investment strategy. You should speak with your own financial professional before making any investment decisions.

Past performance is not indicative of future results. Neither Bleakley Financial Group, LLC nor Peter Boockvar guarantees any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.

Certain statements contained herein are statements of future expectations and other forward looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance or events to differ materially from those expressed or implied in such statements.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

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Approval #719807

[1] Bloomberg

[2] Bloomberg

[3] Bloomberg

[4] Bloomberg

[5] Pew Research